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Still More Weakness than Strength in Global Housing Markets: Scotiabank

TORONTO, Dec. 11, 2012 /CNW/ - The downward pressure on pricing in a
number of national housing markets appears to have eased over the
summer and early fall though considerable strains remain, according to
a Global Real Estate Trends report released today by Scotiabank.

"In the majority of advanced and emerging nation property markets we
track, average inflation-adjusted house prices were negative on a
year-over-year (y/y) basis in the third quarter," said Adrienne
Warren, Senior Economist and Real Estate Specialist at Scotiabank.
"However many are showing some tentative signs of stabilization,
including the U.S., the U.K., Australia and China, supported in part by
highly accommodative monetary policy."

At the same time, there is little evidence of significantly improved
momentum. Outside of the continuing deep property slumps in Spain and
Ireland, pricing in most national housing markets appears range-bound
for the time being. In 12 of the 17 (71%) countries reporting Q3 data,
average prices were in a +/- 3% y/y range. In 14 (82%), they were
within +/- 4% y/y.

"This relatively flat global performance suggests an ongoing high degree
of caution among households and investors unwilling to make big
residential property bets at this juncture," said Ms. Warren. "Lower
home prices and historically low interest rates are supporting
affordability, but in many countries mortgage lending conditions remain
tight and unemployment is elevated."

According to the report, Canadian housing activity has geared down.
Average inflation-adjusted home prices were moderately below year-ago
levels (-1.5% y/y) for a third consecutive quarter in Q3. Exhausted
pent-up demand and reduced housing affordability in high-cost urban
centres have dampened sales, while the return of balanced conditions in
the majority of local markets has cooled pricing.

At the same time, housing activity in the U.S. is gearing up. Real home
prices rose 5% y/y in Q3, an acceleration from the 3% advance recorded
in the prior quarter. Despite the uptick, average prices are still down
roughly 30% from their 2005 peak, underscoring the long road to
recovery ahead for the U.S. housing market. The improvement is being
supported by moderate job growth, record housing affordability and
fewer distressed property sales.

Housing markets remain weakest in Europe, not unexpectedly given ongoing
recessionary conditions, fragile consumer confidence and high
joblessness. The euro zone wide unemployment rate rose to a record
11.7% in October, while for young workers under 25 it has soared to
almost 24%. Wage compression and emigration are further reducing the
pool of potential homebuyers. These markets are expected to remain
under pressure through 2013.

Real home prices in the majority of major cities in China were modestly
below year-ago levels in Q3, though conditions appear to be steadying.
Official efforts in recent years to rein in soaring property values
appear to have succeeded, allowing for some easing in monetary policy.
In India, a muted economic performance, weak consumer confidence and
high inflation and interest rates are weighing on the country's housing
market. Real house prices declined y/y in the majority of major cities
for a second consecutive quarter in Q3.

In the Latin American region, average real house prices were down 1% y/y
in Q3 in Mexico, where persistent inflationary pressure are keeping
policy interest rates relatively elevated. Chile is reporting moderate
residential property price gains averaging 2% y/y, supported by
relatively strong domestic activity and a tight labour market. Colombia
continued to record strong house price growth through Q2, though
slowing consumer spending and credit demand point to some deceleration
since mid-year.

Scotiabank is one of North America's premier financial institutions and
Canada's most international bank. With more than 81,000 employees,
Scotiabank and its affiliates serve some 19 million customers in more
than 55 countries around the world. Scotiabank offers a broad range of
products and services including personal, commercial, corporate and
investment banking. In December 2012, Scotiabank became the first
Canadian bank to be named Global Bank of the Year and Bank of the Year
in the Americas by The Banker magazine, a Financial Times publication. With assets of $668 billion
(as at October 31, 2012), Scotiabank trades on the Toronto (BNS) and
New York Exchanges (BNS). For more information please visit www.scotiabank.com.